The build out of a commercial space is a key point that is negotiated between the tenant’s real estate broker and the landlord. Manhattan landlords approach improvements to tenant’s space in various manners.
-A new building installation (NBI) based on the tenant’s architectural plans. Landlords use building standard materials and finishes when they provide new building installations. If the tenant requires that above standard materials or finishes be uses, the tenant is responsible for paying for the difference in cost between building standard and upgraded materials and/or finishes.
-A work letter reimbursing the tenant for the cost of construction. The tenant is allowed to hire their own licensed and insured contractor to build out their own space. The landlord then reimburses the tenant. A cap based on a dollar amount spent per square foot is put on the reimbursement.
-Free rent in lieu of construction. Generally, the longer the term of the lease the greater the amount of free rent.
-A combination of free rent and a work letter.
-Pre-built space configured in a generic manner that can appeal to a variety of office tenants.
-Offer modest improvements to the existing space. These modifications generally entail, paint, carpet and some cosmetic changes.
-Rent the existing space in “as is” condition.